At the end of “Money: A Story of Humanity”, David McWilliams admits that he is not a solitary writer but a chatty one, someone who writes by bouncing ideas off others to help wrestle masses of facts, figures and disjointed ideas into an overall story that is not simply convincing and coherent but entertaining and compelling too. In Money, his best and most important book yet, he succeeds brilliantly.
By anchoring the story of money in places ranging from ancient Athens, imperial Rome, Amsterdam during the revolutionary age of the Dutch Republic, pre-Renaissance Florence, revolutionary Paris, and Trieste at the end of the Austro-Hungarian empire, McWilliams makes you want to travel, book in hand, to discover each of these great cities in a different light. By telling the story as a single narrative, spanning the entirety of written history, Money also raises profound questions as to how we have ordered our societies and the inequalities that we have built into the template of our civilisations for millenniums.
Money is two stories of humanity. On the one hand, as McWilliams enthusiastically champions, commerce has been a liberating force for humanity, allowing escape from the crushing oppression of tyrants and abject poverty of the masses. On the other, throughout history that escape has signalled liberation for some and exploitation, violence and misery for others. The story of money is both about its potential to allow all of us to live in conditions of greater freedom and equality, and its failure ever to truly deliver on that promise.
“Barbarity in pursuit of prosperity for some” is the dominant theme for most of the history that McWilliams covers. He illustrates this with vivid descriptions of empires across the centuries and the extractive economic systems that enabled them. Rome, he explains, was a privatised empire that engaged almost every stratum of Roman society as shareholders in the imperial exploitation system. So too, many centuries later with the Dutch empire. In the 1600s, the Dutch East India Company, the biggest company the world had ever seen, provided an investment opportunity for a broad section of the Dutch population to profit from Holland’s violent exploitation of its colonies.
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And in one of the standout chapters in the book, McWilliams graphically describes the horrors wrought in the Belgian Congo by the Anglo-Belgian India Rubber and Exploration Company, a public share company whose beauty lay in the fact that “it broke the link (in most investors’ minds) between the value of their share portfolio and the repellent origin of their wealth”. Between five and 10 million people died in the Congo Free State during the company’s years of pillage.
By way of contrast, “fragility alongside prosperity for many” is the theme that emerges from McWilliams’s treatment of more recent economic history. He expertly describes three features of the current global economic system that highlight starkly its fragility. The first is the fact that the contemporary global economy is based on fiat money, that is currency not backed by a physical commodity such as gold or silver but is based instead on trust in the state issuing that currency. In a fiat system, unelected officials in central banks print money under government charter, thereby assuming a critical role in maintaining the stability of society.
A second feature of the contemporary global economy is that printed currency makes up just a fraction of it. Today, currency – such as the cash in our pockets – amounts to about 10 per cent of the money supply; finance, governed by credit and contracts, comprises the rest. Money as finance is created by commercial banks, not by central banks, although the latter try to control commercial bank lending. Having seen various crises where the central bank is not only not in charge but doesn’t appear to have a clue what is going on, McWilliams concludes that the stability of this system is largely an illusion. “When you ask yourself why we have recurrent banking and financial crises, this is the answer – the people in charge are not in charge.”
The third worrying feature of the contemporary global economy that McWilliams highlights is a growing loss of faith in the entire system. As he emphasises, money, banking and finance are all about trust. However, the trust that the system ultimately depends on has been severely eroded by the actions of central and commercial banks in recent decades.
Money is a fabulous read but its real importance lies in the questions it raises about the future shape of our societies. The fundamental issues McWilliams raises regarding the stability and fairness of the contemporary global economic system, and the degree to which mainstream economics reflects reality, provide a clarion call to begin charting a new and radically different way forward.
- Ian Hughes is author of Disordered Minds: How Dangerous Personalities are Destroying Democracy
